Our market development work is important to achieving our statutory objective to promote competition in, reliable supply by and the efficient operation of the electricity industry for the long-term benefit of consumers.

If an anomalous event or outcome occurs in the market or the broader electricity sector, we investigate it to determine the causes and whether something can or should be done to prevent such an event or outcome from occurring again.

Background

The Electricity Commission operated a reserve energy scheme that defined a trigger point for reserve generation capacity. When the Crown owned the Whirinaki generating station, the reserve generation capacity trigger primarily served as the catalyst for ensuring Whirinaki ran to help preserve hydro storage.

Transitional provisions in section 136 of the Electricity Industry Act 2010 include that:

conditions in resource consents that refer to a determination by the Commission regarding reserve generation capacity must be read as if they referred to the Authority making a reserve supply determination

the Authority may make or rescind a reserve supply determination but only in accordance with criteria that it has made publicly available.

The Crown no longer owns Whirinaki and the Authority does not intervene in the market to suggest or require when generating plant ought to operate. However, the Authority is aware of two companies with hydro lake consent conditions linked to the Commission’s reserve generation capacity trigger point.

We've published the standing reserve supply determination to ensure continued access to hydro lakes at a trigger point that reflects the original expectations of the consenting authorities.

Standing Reserve Supply Determination

In accordance with section 136(3) of the Electricity Industry Act 2010, the Authority makes the following standing reserve supply determination applicable from the date of termination of the Whirinaki Agreement (Reserve Generation Capacity Agreement) between the Authority and the Crown.

"A reserve supply determination is made when the energy risk meter for either the South Island or for New Zealand as a whole indicates that the current security of supply situation is in the ‘alert’ or ‘emergency’ status, as published in the system operator’s weekly security of supply report.

A reserve supply determination is rescinded when the energy risk meters for both the South Island and for New Zealand as a whole, indicate that the current security of supply situation is ‘normal’ or ‘watch’ status, as published in the system operator’s weekly security of supply report."

We're aware of two companies with hydro lake consent conditions that depend on the reserve supply determination: Contact Energy for Lake Hawea and Genesis Energy for Lake Tekapo.

Contact Energy

Contact Energy has consent to use water from Lake Hawea for electricity generation. A condition within the consent enables the water level to be lowered from 338m to 336m when “the Electricity Commission (or any statutory body exercising like powers and functions to the Electricity Commission) determines that reserve generation capacity (such as that currently located at Whirinaki) should generate electricity.”

Genesis Energy

Genesis Energy has consent to use water from Lake Tekapo for electricity generation. A condition within the consent enables the water level to be lowered from 704.1m to 701.8m during October to March when “the Electricity Commission (or any statutory body exercising like powers and functions to the Electricity Commission) determines:

(i) that reserve generation capacity (such as Whirinaki Power Station) is required to generate electricity: or

(ii) the National or South Island minzones (or their future equivalents) have been breached.”